Home' Trinidad and Tobago Guardian : June 27th 2013 Contents JUNE 2013 • WEEK FOUR www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG3
Chief editor-business: ANTHONY WILSON
Editing and design: NATASHA SAIDWAN
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Last week, I attended a conference on Public Private
Partnerships in Infrastructure Development and
Financing at the Atlantis Hotel on Paradise Island
in The Bahamas, along with an estimated 150
Caribbean government and private sector officials,
investors and representatives of banking, engineering legal
and accounting firms throughout the region.
To say that the conference---which was hosted by CIBC
FirstCaribbean, the predominantly Canadian-owned bank that
is headquartered in Barbados---was eye-opening for me would
be an understatement.
What the conference demonstrated is that Public Private
Partnerships (or PPPs as it is called) come in all shapes, sizes
and stripes, but at the foundation, it is an agreement between
the State and the private sector through which the private
sector can provide a public service or manage State assets that
would otherwise be provided or managed by the public sector.
Among the reasons why a government would agree to allow
a private sector entity to take over a service traditionally
provided by the State or manage a State-owned asset is that
a PPP allows a country not to have to assume the financial
and operational risks for a project.
As Bahamaian Prime Minister Perry Christie said in a witty
and down-to-earth luncheon presentation on the first day of
the conference: "The main reason that Government would
contemplate such arrangements is that they offer the possibility
of an improvement in value-for-money for the Government.
This is achieved through the transfer of risks to the private
sector where it is best placed to assess and handle those risks.
The improved value-for-money is also secured by the fact
that, where it is private sector capital that is employed and
at risk, the economically-efficient planning and operational
decisions are made. That, in turn, should lead to both better
quality services and lower cost services."
Several of the speakers also advocated the virtues of PPPs
as a means of government of cash-strapped Caribbean nations
maintaining high levels of much-needed infrastructure spending
at times when budgets are constrained by fiscal deficits caused
by decreased revenues and higher expenditures.
Christie warned: "I must stress that such a consideration
should not be the main driver for the initiation of any PPP
project which, I believe, must first and foremost be driven by
an efficiency objective. To pursue PPPs merely for the fiscal
benefits may prove illusory and lead to unsatisfactory results
for both Government and the public."
Nevertheless, it is clear that many Caribbean countries will
opt for PPPs, given their financial status and the need to
For The Bahamas, according to Christie, the nature of projects
that are typically suitable for the implementation of PPPs is
generally in relation to transport infrastructure such as roads;
bridges; sea ports; airports public bus systems and ferries; as
well as electricity generation and distribution; water distribution
and sewerage; and telecommunication networks.
In addition, according to the Bahamaian leader, one also
finds PPPs in the area of public structures from which gov-
ernment services are provided, such as hospitals, schools and
If a Caribbean country needed to build a highway, for
example, the expenditure for its construction would be for
the account of the private sector and not the government.
Jamaica constructed its highway linking Montego Bay in
the north of the island to Kingston through a PPP and that
highway is now a toll road, which means that users have to
pay to use the highway, which cuts transport times between
the two main Jamaican cities considerably.
Outlining the peculiar needs of The Bahamas, which has 700
islands spread over 100,000 square miles, Christie said: "Under
a PPP arrangement, a private sector partner could be responsible
for the design and construction of an asset for the provision
of a public service. That partner would then charge user fees
to cover the costs of the service, either in whole or in part with
a Government subsidy. In some instances, the entire costs
could be borne by Government."
He said the construction of the current arrangement with
Arawak Cay Port Development Holdings Ltd (ACPDH) in Nassau
was along these lines, with ownership of the port being a part-
nership between the Government, ACDPH and the public (the
company is listed on the Nassau Stock Exchange). This part-
nership was formed to design, develop, construct, manage,
operate and maintain the Nassau Container Port and the Glad-
stone Freight Terminal as a modern container port and ware-
"Alternatively, the private partner could be contracted to take
over management of a public asset, such as an airport. As
many of you will know, this is the approach that has been
adopted in respect of the management of the Lynden Pindling
International Airport in Nassau."
On the issue of highways, the obvious question is why did
the Kamla Persad-Bissessar administration decide to go ahead
with the Point Fortin Highway with funding from the Treasury
and not through a PPP.
The answer was provided by Cliff Inskip, the managing
director and head of infrastructure at CIBC who said that PPPs
take quite a long time to implement because there needs to be
a careful assessment of the risks and rewards before a contract
can be signed. The appropriate risk-sharing must be thoroughly
worked out and agreed to by both the Government and the
private sector partner. This often takes between 12 to 18 months
in the typical case. He also made the point that PPPs require
considerable political will, but are not amenable to electoral
Michael Derrick, the coordinator of the PPP Unit in T&T s
Ministry of Finance, said Cabinet had approved PPPs as national
policy and that there is a robust pipeline of 90 projects with
a value of over US$5 billion that his unit has identified in col-
laboration with ministries, departments and divisions.
He said there is Cabinet approval to proceed with 20 projects
by way of PPPs, including two airports, four highways, an open
access broadband system, schools, hotels and diagnostic centres.
Another advantage is the possibility that PPPs allow gov-
ernments to achieve value for money, which was defined by
Richard DesLauriers, the managing director of project finance
and PPPs at PwC in Canada, as being if the project results in
a net positive gain which is greater than that which would have
been achieved through an alternate procurement route.
Darcy Boyce, who is a minister in the Office of the Prime
Minister in Barbados, said that for PPPs to work in a regional
context, it must be the most efficient way to deliver the project
and the PPP must either save the government money or generate
revenue for the State.
Is PPP the answer for
Perry Christie, Prime Minister
of the Bahamas
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